Globalization's Effects on Hiring and Shopping Local 🖼
Some people like to sit on the sofa and eat Ben & Jerry’s ice cream. I roll my eyes at this because I’m very different: I like to read the Wall St. Journal’s Christopher Mims …while eating an entire pint of Ben & Jerry’s on the sofa. This past weekend, Mr. Mims suggested companies may be reassessing where they source products, some even considering more domestic production. The motivation for this started a few years ago with the U.S.-China trade war, then continued with the supply chain issues of 2020-21, and continues today with the war in Ukraine. Taiwan, where most of the world’s advanced microchips are made, is 100 miles off the coast of China. What could possibly go wrong...
Mr. Mims says that, unlike in the past, businesses may no longer be assured of cheap raw materials, cheap shipping from across the globe, and timely shipping. We’re no longer assured of cheap overseas labor, as wages and costs appear to be rising overseas. Due to these factors, business are turning to 'supply webs’, aka multiple sources where they get what they need.
Mr. Mims doesn’t claim that there is massive deglobalization at hand, but there may be some movement in this direction. Now would be as suitable a time as any to bring things home. A few projects stand out. The $52 billion Chips for America Act is an effort to bring semiconductor manufacturing back to the U.S. Intel is spending $20b on a new factory in Ohio.
Globalization interests me because it affects our domestic shop local movement. The shop local movement directly correlates with local hiring, employment, and manufacturing. An industry colleague recently told me that his Dallas company had 70 programmers overseas and he didn’t feel like this was depriving any Americans of jobs. He said there were no programmers left here in America. He said that there were “no programmers going hungry.” I’d venture to say that’s some self-serving narrative to help him afford a new Ford F-150 Lighting down payment. Each programmer often comes with support staff, marketing experts, book keepers, and more. We may not have many programmers waiting in the wings in Cincinnati, but we do have support staff and people that can do the ancillary work. When we hand over one job, like a programming job (or even a call center job), we’re in fact handing over a bevy of them. And, we’re handing over taxes. Even if we paid the 70 people here the same wage (e.g. $20/day) as overseas, we’d come out ahead because at least our local schools would get the taxes on that $20. As it stands now, our communities will get none of those tax dollars. The foreign nation wins.
Companies offshore hundreds of thousands of jobs--and likely millions. It’s the reason that quite simply the rest of the world is getting richer and the U.S. poorer. It’s a fact: today’s kids are poorer than their parents. We are emptying our nation’s pockets and filling overseas’ pockets. Then, when it comes time fight threats like Russia, our weakened economic state results in us being less able to fight. After all, money is power—in particular, F-16s.
I believe that one day, much like we realized that we’re overly reliant on foreign factories, we’ll realize the cost of offshored workers is too high. I believe we need to: ‘backshore.’ We need to bring ‘back' the jobs and put them in our ‘back’ yards. When we rally to hire domestic programmers, we also increase our domestic hiring on a wide variety of non-tech jobs and we enrich local communities. When we have local jobs, we have local shops. When we offshore our middle class jobs to overseas countries, we offshore our local shops. Note: I’m not here to build the shop local movement in Bangalore--I’m here to build it in Boston. We have a nation of diverse people who have come here from around the world. These people have families and want to work. It would be ironic to tell them we just gave someone in the country from which they came the job they wanted.
In the 1990s, 40% of global semiconductors were made in the U.S. Now it’s: 12%. It’s much harder to bring something back than to keep it in the first place. The first step to keeping our service industry here strong is simply keeping it here even if that means paying more.
We don’t want to have to throw a Hail Mary Chips-like Act in 2050 because we let our service sector jobs be hallowed out from 2000 - 2022. I think the solution is training more programmers and paying more people to become programmers. We should hire 70 programmers here and pay more because the cost to bring those jobs back in 20 years will be many times more expensive.
Praising the protection of domestic jobs is often cast as some protectionist, backwards, xenophobic, outdated, isolationist geezer rant about a lawn. But, here's the thing about old people ranting about lawns: they’re often right. Excessively walking on lawns kills the grass, just like shipping jobs overseas kills communities. Central Park has the lawns roped off all the time. If people can understand the Central Park lawns, I hope they can understand helping communities across America.
Local jobs = Local shops = Local taxes = Local prosperity = National prosperity = Ability to stop bad actors like Putin
Conversely:
Hiring overseas = Hurting local shops = Hurting local taxes = Hurting local prosperity = Hurting national prosperity = Letting Putin ride shirtless on a horse. …We don’t want that.
At Bridge, we try to hire locally. All of team members are located in the U.S. We’re trying to help keep the lawn nice.